Jennie Huang Bennett, the chief financial officer for the Chicago Public Schools, has emerged as the top candidate to lead Chicago’s finances under Mayor-elect Lori Lightfoot. who takes the reins in two weeks, public finance sources said.
Sources cautioned Monday that the selection of a chief financial officer or that person's acceptance was not final. Bennett has been working with the transition team and has met with current city officials, sources said.
Representatives for the mayor-elect did not respond to emails or calls seeking comment on whether Bennett is the top contender or how soon her finance team — which also includes comptroller and budget director — would be announced.
Municipal bond market participants are watching the CFO appointment closely as the city faces daunting pension and structural budget challenges and they are concerned over whether Lightfoot’s policies will backpedal on fiscal progress made under Mayor Rahm Emanuel and his CFO, Carole Brown.
Several sources said the incoming administration would have liked Brown to remain, but she has long made clear that after four years she is ready to move on with Emanuel’s tenure coming to an end.
When Lightfoot takes office May 20, she must find money to cover a scheduled $280 million pension payment increase and an estimated $250 million 2020 budget gap. She inherits one junk-bond rating and another only one notch away. The city runs on a $10.7 billion budget this year.
Jeffrey Bethke, an executive vice president and chief financial officer at DePaul University, is leading Lightfoot’s transition task force focusing on the city’s budget deficit and related financial issues. Bethke's office referred calls to Lightfoot's press team Monday.
Emanuel has been credited by the market with raising taxes for pensions and downtown economic development. Brown, a former banker who also brought to the table public-sector experience from serving as Chicago Transit Authority chairwoman, is well-regarded by the buyside for her financial acumen and close investor communications.
Bennett left her public finance banking position at Morgan Stanley after 12 years to join the district’s finance team as treasurer in 2012. She was named chief financial officer in 2016 and works alongside Ronald DeNard, senior vice president of finance since 2015, managing the junk-rated district’s finances.
Several banking sources described Bennett as a great choice if an appointment pans out.
“She’s got the rare combination of banking experience and public budgeting experience,” said one market source.
“She knows the market and has relationships with the rating agencies and investors and understands the budget process. It’s a perfect skill set,” the source said.
“What she brings to the table is the ability speak directly to the market and hit the ground running. She brings the experience of marketing the city’s most difficult credit,” said another source.
Bennett joined the district as its finances were deteriorating amid rising pension, debt, and operational costs that sunk its ratings and led to a spike in borrowing costs and threats to its future market access.
Additional city levies and state pension and operational aid in recent years has helped stabilize the school district’s balance sheet and it’s begun rebuilding its cash balances. Ratings agencies have upgraded CPS, but the the district remains stuck with three junk ratings and one low investment grade rating as it still relies heavily on cash flow borrowing to manage through the fiscal year.
While of less concern to the investment community, investment bankers are watching closely for who will lead the City Council's powerful Finance Committee that reviews city bond deals and other financial issues and what role that leader might play in bond policies going forward. Longtime chairman Edward Burke resigned late last year after federal authorities filed corruption charges against him. His successor Alderman Patrick O'Connor lost his re-election bid in February.
In the past, the mayor has tapped allies to lead committee posts, but with the incoming administration the council is expected to assert itself on the picks. Alderman Scott Waguespack, who chairs the Progressive Caucus, and Alderman Tom Tunney are interested in the post and considered front-runners.
